Will Supreme Court contain nuclear-option fallout on ObamaCare

Last week the U.S. Supreme Court was asked to decide a case that could determine the future of the Affordable Care Act. The case stems from language in the law making insurance premium subsidies available only for plans purchased on “an Exchange established by the State.”

What the drafters of the law probably didn’t anticipate is that many states – 36 so far – would actually refuse to set up their own exchanges, thus making a massive tax and subsidy scheme illegal with respect to millions of Americans in states where plans are purchased on exchanges created by the federal government, not by the states.

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In a clumsy effort to fix that problem, the IRS issued a regulation designed to re-write the law: It said that the words “by the State” can also mean by the federal government when it’s acting on behalf of the state. Individuals, businesses, and even a few states, filed lawsuits arguing that the IRS fix was illegal, since only Congress has the authority to rewrite the law.

The first court to decide the issue, the U.S. Court of Appeals for the D.C. Circuit, invalidated the regulation on the basis that it was contrary to the statute’s unambiguous terms. According to the court’s opinion, the law “plainly makes subsidies available only on Exchanges established by states” and “To hold otherwise would be to say that enacted legislation, on its own, does not command our respect—an utterly untenable proposition.” Just a few hours later, the U.S. Court of Appeals for the Fourth Circuit reached a different conclusion and upheld the regulation.

The plaintiffs in the Fourth Circuit case – King v. Burwell – have asked the U.S. Supreme Court to hear the case, and they could do that as early as October. Meanwhile, in Halbig v. Burwell, the D.C. Circuit case, the Obama Administration has asked the full D.C. Circuit to hear the case again en banc, this time with all 11 active judges participating instead of the usual three-judge panel.

The Obama administration’s decision to seek en banc review in the D.C. Circuit is not surprising. Prominent Obamacare supporters like Emily Bazelon had already predicted that President Obama’s four recent appointees to the D.C. Circuit could be counted on to deliver a victory for the Obama Administration. And her assessment won’t come as a surprise to anyone who believes that this is precisely why Harry Reid deployed the so-called “nuclear option” to get President Obama’s nominees confirmed. As Reid put it when asked if he believes this case vindicates that decision: “I think if you look at simple math, it does.”

But there are reasons to doubt that the D.C. Circuit judges will do what Bazelon and Reid expect them to do.

First, it is very rare for the D.C. Circuit to take a case en banc. As Adam J. White recently noted, “Each year the court's three-judge panels make roughly 500 rulings, but the court averages roughly one en banc rehearing. This year has produced a bumper crop: two. The previous year: zero.”

Second, this is the type of case the Supreme Court is likely to take, and they are likely to do so before the D.C. Circuit even has a chance to issue a new ruling. With conflicting decisions from two appellate courts, and several outstanding trial courts considering the issue in other states, the health care industry and the American people will remain under a cloud of uncertainty until the Court settles this dispute.

In short, historical patterns and the ordinary legal process make it difficult to see why the D.C. Circuit would weigh in. The fact that the Obama Administration is nonetheless asking that D.C. Circuit to do so makes it clear that they perceive President Obama's recent appointees to the court as little more than rubber stamps appointed for the purpose of skewing the outcome of cases like these.